Energy industry news, analysis, and commentary

When does an alternative energy source start to be just an energy source, no “alternative” required?

Solar power isn’t at that tipping point yet, but forecasts for the day when electricity from the sun achieves global price parity with electricity derived from established fossil fuels are proliferating even among serious-minded business people.

There are 70,000 people employed in the research and development components of the photo-voltaic solar industry today, president of Applied Materials‘ solar unit Charlie Gay told Breaking Energy recently, and solar is set to be at “grid parity” in 19 countries this year. Gay, who has a doctorate in chemistry, estimates that more than 100 countries representing 98% of the world’s population will see grid parity by 2020, guaranteeing that solar energy is part of the anticipated global growth of electricity use by 2000 gigawatts in the next decade.

“The industry is really of age,” Gay said, “the decade that we’re coming to now will be a transformative one.”

As efficiency soars and costs drop in a cycle analogous to the data processing and price trends seen in the computer industry, solar will become an obvious solution for developing countries without established central generation systems reliant on extensive transmission infrastructure to deliver power.

There are already roughly 400,000 solar home systems installed in Bangladesh, one of the world’s poorest countries, many of them building off of the technology advances made in LED lighting and flat panel televisions in recent years.

Groups like the World Bank and even traditional financial institutions have begun to take a risk on financing smaller solar units, often building on their work with banking using mobile phones, a massive trend in many third-world countries that have leapfrogged traditional consumer banking infrastructure.

The infrastructure has become much cheaper and less cumbersome across the sector, Gay said, and is set to become progressively more accessible.

Demand helps grow scale for the product, scale brings down costs and lower costs boost predictability for financing institutions and customers who then boost demand, creating a “virtuous cycle” that grows the overall industry.

Replicating that progress in developed countries like the US is being attempted by various companies seeking to simplify the leasing process and reduce up-front costs. Google‘s agreement to fund solar panel leasing through a program set up by California-based SolarCity has attracted widespread attention, and could step in where a lack of coordinated regulatory support for solar power has limited domestic uptake of the technology.

For now, in many regions, regulatory incentives remain paramount. Even SolarCity has remained focused to date on operations in those states that offer subsidies for low-emission energy sources or renewable energy credits that can underwrite initial start-up costs, like New Jersey.